School-Finance Laws Are Unconstitutional, N.D. Judge Decrees

A district judge in North Dakota has ruled that the state's entire
school-finance system is inequitable and unconstitutional.

Judge William F. Hodny this month spared no funding mechanism in
determining that North Dakota's 20-year-old school-finance statutes
violated both the education and equal-protection articles of the state
constitution, and thus required a "comprehensive overhaul.''

The North Dakota ruling offered further evidence of the increasing
success of court challenges to state school-finance systems across the
nation. Just last month, a Missouri judge struck down that state's
education-funding methods. (See Education Week, Jan. 27, 1993.)

The disparities in the ability of North Dakota school districts to
raise revenues "sounded a warning a long time ago and should have been
heeded,'' Judge Hodny wrote.

The all-encompassing decision, which ran to 234 pages and followed a
one-month trial last summer, marked a victory for the nine school
districts and a host of parents, taxpayers, and students who filed suit
more than three years ago.

"We're very, very pleased with the judgment,'' said Lowell L.
Jensen, the superintendent for the Bismarck Public School District #1,
one of the plaintiffs.

State officials plan to appeal the ruling to the state supreme court
within the next six weeks.

"I think the decision goes much farther than the evidence
warranted,'' Solicitor General Laurie J. Loveland said last week.

A supreme court ruling in the case could come by early next year. In
order to uphold a ruling of unconstitutionality in North Dakota, four
of the five justices on the court must agree.

Pressure Is On

In his ruling, Judge Hodny ordered the legislature to establish a
new system within six months that would fully comply with the state
constitution by the end of four years.

There is "pressure to do something while everyone is in town'' for
the biennial legislative session, which ends in mid-April, said Calvin
N. Rolfson, who argued the case for the plaintiffs.

A state education department official said his agency would proceed
to draft a plan for legislative consideration, as required in the
ruling.

To comply with another part of the court order, Gov. Edward T.
Schafer, legislative leaders, Superintendent of Public Instruction
Wayne G. Sanstead, and lawyers from both sides of the case met last
week to discuss their next steps.

Observers said, however, that it remained unclear how much the
legislature would accomplish if the district court's ruling is held in
abeyance and the state is not obligated to change the system until the
supreme court renders a final decision.

'Arbitrarily and Irrationally'

Judge Hodny found that the school-financing system, which relies
heavily on local revenues generated by property taxes, "arbitrarily and
irrationally denies equal educational opportunities to children in
low-wealth districts.''

The system violates the constitutional requirement that the
legislature provide for a "uniform system of free public schools
throughout the state'' by turning over that obligation to districts
having "vastly different'' amounts of taxable wealth, the judge
argued.

The court detailed 11 "constitutionally objectionable features'' of
the finance system, including disparities in per-pupil revenues
resulting from districts' differing taxable wealth; the state-aid
formula, which fails to equalize for variations in district wealth; the
transportation-aid program; the special-education funding program;
state aid for vocational education; and the system of funding school
facilities by relying on local sources.

The court found that the plaintiff schools were "no longer capable''
of educating students to the "high degree of intelligence'' required in
the constitution.

"These limitations do not provide an educational opportunity under
which the students are offered the quality of education mandated by our
constitution,'' Judge Hodny wrote.

The current finance system, which dates from 1973, "will never
eliminate the revenue and expenditure differences that exist'' among
the state's 272 districts, he argued.

Ronald Torgeson, an expert on school finance for the state education
department, said one of the main problems was that the system's funding
formula had not been updated to account for inflation and other
changing factors.

"It broke down from lack of maintenance,'' Mr. Torgeson said,
"because, at one time, it did do the job.''

Both the state and local contributions need to be increased in order
to help fix the system, he said.

In North Dakota, local property taxes are the major source of
funding to districts beyond state aid. But the disparities between the
school-funding abilities of districts are not offset or equalized by
state financial assistance, according to the court decision.

Paralyzed by Politics

A court mandate has been widely seen in the state as the only means
of achieving changes in the system.

Political concerns over increasing state income or sales taxes or
requiring a higher minimum local property-tax rate have paralyzed
legislative action on the issue for years, analysts suggested.

Powerful agricultural interests in the legislature, for example,
have been some of the most outspoken opponents of a larger local
property-tax burden, Mr. Torgeson said.

Moreover, state voters in recent years have rejected tax hikes.

Still, the court decision "is certainly a wake-up call to the
legislature that it is no longer business as usual,'' said Mr. Rolfson,
the plaintiffs' lawyer.

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